How Child Tax Credit is calculated?

How Child Tax Credit is calculated?

For 2019, up to $1,400 of the Child Tax Credit (CTC) is refundable. (Previously, the CTC was entirely non-refundable.) So if your income tax bill when you file in 2019 is zero, you may be able to get a $1,400 refund for every eligible child. This amount is also indexed to inflation, so it will increase slightly each year.

If you earned $6,500.00 in 2019 and wonder why CTC is lower or not $1,400.00 refundable credit.

Here is the calculation:

Gross Wages $6,500.00
Income Limit $2,500.00
Earned Income exceed limit $4,000.00

CTC is the lower amount of (1) $1,400.00 or (2) 15% of $4,000.00 =$600.00

However, the new tax law also caps the refundable portion of the CTC to 15% of your earned income that exceeds $2,500. That means you need to have at least $11,830 of earned income to qualify for the full refund of $1,400.

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